Obama sees flickers of hope for economy

(WASHINGTON) President Barack Obama has said there are 'flickers of hope' for the recession-hit US economy as his administration readied a big-spending plan to clear toxic assets off banks' books.

'Well, we're already starting to see flickers of hope out there,' he told the CBS programme '60 Minutes,' noting that mortgage refinancings have significantly increased and interest rates have never been lower.

'That promises the possibility at least of the housing market bottoming out and stabilising.'

The interconnection of the modern global economy offered hope as well as danger, he said.

'Now there's a potential silver lining, which may be that things are so accelerated now, the modern economy is so intertwined and wired, that things happen really fast - for ill, but things may recover faster than they have in the past.'

The interview was a day before the president's beleaguered Treasury Secretary Timothy Geithner detailed a 'Public Private Investment Programme' yesterday to entice hedge funds and other private investors into investing in bad assets choking banks' balance sheets.

In the CBS interview, the president was asked if the financial system could implode if the likes of AIG or banking giant Citibank were to fail.

'Yes,' he replied. 'I think that systemic risks are still out there. And if we did nothing you could still have some big problems.'

But Mr Obama stressed: 'I'm optimistic about that not happening. Because I think we did learn lessons from the Great Depression.'

Christina Romer, who chairs Mr Obama's Council of Economic Advisers, said the administration is 'incredibly confident' that the US economy will rebound within a year. 'We will be seeing signs the economy is turning around,' Ms Romer told the 'Fox News Sunday' programme.

On CNN's 'State of the Union' show, Ms Romer said she had 'every expectation, as do private forecasters, that we will bottom out this year and actually be growing again by the end of the year.'

Mr Obama's steps to reverse a deep recession and restructure the ailing US financial system have global implications as he prepares to meet leaders of major developed and developing nations at a Group of 20 summit in early April.

But his reform plans and the vast spending envisioned to reboot the world's largest economy and purge at least US$1 trillion in 'toxic' assets from banks face steep resistance from some in Congress and corporate boardrooms.

Mr Obama, a Democrat whose high approval ratings are being tested in his third month as president as public anger rages over big bonuses at bailed-out financial firms, will discuss his recovery efforts in a prime- time news conference today.

Mr Geithner has been attacked over his failure to halt bonuses of at least US$165 million, and possibly as much as US$218 million, paid out to employees by hobbled insurer American International Group, which has been bailed out with about US$180 billion in taxpayer money.

Mr Obama stepped up his defence of Mr Geithner, saying he would not accept his treasury secretary's resignation even if it were tendered. - AFP, Reuters

Source :


Business Times